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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (9664)	9/26/2006 12:33:29 AM
From: TobagoJack	Read Replies (2) \| Respond to of 217820

Failing in Iraq, try China, by committing trade suicide :0) From Stratfor ... which missed one possibility of perception, when China fails to even bother with blinking at the Schumer initiative re-hashed, that impotency is hard at work, at all levels, and working at achieving nothing, meaning stupidity is rife U.S., China: A Tariff Bill and Midterm Elections Summary The U.S. Senate is scheduled to vote during the week of Sept. 25 on the Schumer-Graham bill, a law that would impose a 27.5 percent tariff on all Chinese goods if Beijing does not revalue the yuan. Even if U.S. Treasury Secretary Henry Paulson cannot stall the bill, the proposal is not likely to pass. Regardless, the uptick in anti-China rhetoric surrounding the bill allows Republicans to set themselves apart from U.S. President George W. Bush before November's midterm congressional elections. Analysis The U.S. Senate is scheduled to vote during the week of Sept. 25 on the Schumer-Graham bill, a law that would impose a 27.5 percent tariff on all Chinese goods if Beijing does not revalue the yuan. Though the bill, which was shelved after a flurry of debate earlier in the year, is unlikely to pass, the Republicans' introduction of the legislation before November's midterm congressional elections was motivated by other considerations. The bill's sponsors, Sens. Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C., visited China in March amid U.S. criticism of the country's failure to revalue its currency. After their trip, the senators said they were happy with Beijing's progress and promises to continue reforming the Chinese economy -- and the anti-China rhetoric died down. But now that the U.S. congressional elections are on the horizon, Republicans are searching for ways to set themselves apart from the country's difficulties in Iraq and from President George W. Bush, who opposes the China currency reform bill. This strategy is quite advantageous for Republicans. First, the bill's success or failure will not affect the Republican objective. In the unlikely event that it passes and Bush vetoes it, the Republicans still will have shown that they can act independently of the president. If the bill passes and Bush signs it, they have shown they can force Bush to accept their initiatives -- though the legislation is unlikely to make it to a House vote before November, meaning the issue would have to be revisited in the next congressional session. Finally, if the bill does not pass, congressional Republicans still have demonstrated their independence from the administration while simultaneously finding a hot-button issue toward which to steer the media. China's currency is also one more issue that will help draw Democratic candidates away from talking about Iraq. In addition to pre-election considerations, Republicans will attempt to use the tariff bill as a lever with China. Treasury Secretary Henry Paulson just returned from China, where he set up a new economic dialogue -- although there is nothing really new about the dialogue except Paulson's role, since Washington still wants currency reform while Beijing agrees but insists reform must be slow and measured. Paulson, like Bush, does not want to slap tariffs on China, hurting vital business interests. Earlier in 2006, when the Treasury Department and the House were arguing over whether to label China a "currency manipulator," the threat of a punitive bill emerged. We now see this threat re-emerging as Paulson comes out in favor of allowing China to make slow, measured progress. At the same time, the threat of a Schumer-Graham bill gives Paulson more leverage in his negotiations with China. Thus, Beijing probably will offer a few olive branches to offset the dispute over the yuan -- which hit a new high of 7.92 to the dollar Sept. 25 -- and to show that it is continuing to address U.S. concerns. Though the Schumer-Graham bill is a blunt tool with which to prompt China to adjust its currency policies, it is also a handy political lever for Republicans as the midterm elections approach.